Spotify is challenging Amazon's Audible with its entry in audiobook market

Spotify newly launched its audiobooks service for US users this Tuesday, directly competing with Amazon's Audible audiobook service. As a part of this, Spotify released a library of over 300,000 books on its platform. The vice president of Spotify and the head of the audiobook division, Nir Zicherman, stated that the company is exploring various business models for its audiobook business, such as advertisement-based, subscription-based, and direct purchase models. He also stated that, although the service is initially being launched only in the US, Spotify will soon make it open for other markets too. The US is the largest market for audiobooks, which is being led by Amazon’s Audible. According to industry experts, Audible controls over 41% of the audiobook market. The major reason for such a dominant share of Audible is Amazon's marketplace. Amazon is the largest e-commerce service in the world. Because of this, many publishers prefer publishing their books on Amazon first to ensure their wider reach. Since the launch of Audible in 1995, Audible has been providing users access to thousands of audiobooks on a subscription basis or through direct purchases. Audiobooks have only a 7-8% market share of the global books market. But it is also the fastest growing segment of the global books market. The rapid increase in smartphone users in developing countries has greatly impacted the audiobook market. The COVID-19 market had disrupted the supply chains for buying physical books. Because of this, many users shifted to audiobooks. During the COVID-19 pandemic, the audiobook market grew faster than ever. As a result, Apple and Google, both also increased the pace of growing their shares in the audiobook market. But Audible still has managed to keep a dominant share of the audiobook market. Spotify has a direct competition with Audible in the podcast market. But with the launch of its audiobook service, Spotify is now competing with Audible in the audiobook market as well. Spotify started as a music streaming service, which became popular due to its playlist feature and user-specific music recommendations. Spotify has almost 190 million premium listeners who primarily use Spotify for listening to music and podcasts. This makes Spotify the largest audio platform in the world, beating even Apple Music. This offers a needed edge to Spotify over Audible and may help it to acquire a significant market share of the audiobooks. Mr. Nir Zicherman stated a similar vision that introducing its massive user base to audiobooks, will help the US and global audiobook market to expand exponentially. Spotify in June 2022, completed the acquisition of Findaway, a leading distributor of audiobooks, globally. The acquisition cost $123 million to Spotify, but it has posed a significant challenge to Audible, as Spotify now owns one of the largest audiobook distributors in the world. Amanda D’Acierno, president and publisher of the Penguin Random House Audio Publishing Group, admired Spotify’s decision to directly work with the publishing house for acquiring audiobooks and stated that many authors from Penguin Publications appear on various podcasts on Spotify. Spotify’s audiobook service will now enable these authors to directly market their audiobooks on Spotify, ensuring users a seamless experience. It will be interesting to see how Spotify expands and solidifies its new business in the coming years.